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Recapitalisation

The Covid-19 pandemic has placed immense stress on UK businesses of all sizes and across all sectors.

The Covid-19 pandemic has placed immense stress on UK businesses of all sizes and across all sectors. The UK government has responded with far-reaching stimulus measures including business funding packages and support for UK workers. As a result of these necessary interventions, many businesses have taken on higher levels of debt than they would have planned for. The demands of this debt may compromise the growth and viability of many UK businesses if there are no supportive mechanisms in place.

To address this challenge, TheCityUK has established a Recapitalisation Group (RCG) through its Leadership Council, engaging firms right across the UK-based financial and related professional services industry as well as key industry stakeholders and policymakers. The group is working to understand and identify mechanisms to support the recapitalisation of UK businesses which have needed to take on additional debt in response to Covid-19.

The group’s work will include consideration of the potential scale of issue, how the financial services sector can support any such recapitalisation, how existing and new private, public and hybrid proposals can support businesses, and ultimately, how to protect employment and speed economic recovery.

On Monday 11 May, we wrote to Bank of England Governor, Andrew Bailey, to share initial analysis of the Recapitalisation Group on the potential level of unsustainable debt held by UK businesses in light of the Covid-19 pandemic. That letter also set out our approach to finding industry-led solutions to recapitalise these businesses and support economic recovery.